Comments on Timothy Siegel's articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/timothy-siegel/articles http://seekingalpha.com/article/82219-the-problem-with-designer-etfs?source=feed#comment-219925 219925 Fri, 01 Aug 2008 07:24:11 -0400
What interests me most about your thesis is how you seem to advocate for a more "human" managed selection of stocks than for a selection of stocks chosen by a computer algorithm while admitting that market cap itself is an emotionally charged way of valuing a company (all with which I totally agree). Yet, you seem to ignore the time-oriented part of the investing process that is, by its very nature, about human decision to allocate and or reallocate funds according to perceived changes in the market. I don’t think the ETF’s take away from this human element. The formulaic, non-human, objectivity of the ETF is precisely why it is a good investment tool—it is a “control” in a world that is more than uncertain at times. In the case of SDY, which I recently purchased at $43/share, the unchanging formula is what attracts me to it. I know what I can count on. The ETF is more heavily weighted in financials than any other sector and this is why it has greatly underperformed the greater market. However, if you share my prognostication for the market moving forward, I believe many other sectors will soon be catching up with financials. This judgment is the “human” part of my investing strategy, and since I am only 25, I have a time horizon that provides ample opportunity for this imbalance to work itself out—meanwhile the dividends will compound the total number of shares I own. Further, because of the “rigid” formula of the ETF, if a company can't afford to keep its dividend or has to cut it after 25 years of increases, then it gets booted automatically. This is good because something fundamental in the company’s health has changed and unlike humans, the computer algorithm can’t find ways to justify holding on to a loser that has “broken the rule.” At the same time, the computer program also doesn’t get scared and sell a good company at a loss simply because it was taken down with its sector. But the best part is that I didn’t have to pay a transaction fee to get rid of the loser, or to buy its replacement. Yet, if there are any capital gains I am able to receive them (again without a transaction cost). And on that note, how can you not consider the dividends and management fee structure in your analysis? It’s crucial! The AVERAGE mutual fund (which is generally not actively managed either) is over 1.2%. SDY only has a management fee of 0.35%.

Another point I’d like to address is your very comparison of SDY with the S&P 500 strictly from a capital depreciation standpoint. It was only recently that I chose to invest in SDY, and it was BECAUSE it was down so much in relation to the greater market. Or rather, it was because I realized that the ETF is more heavily weighted in financials than other broader market ETF's, but without the concentration of a strictly financial ETF, and without all the “bad eggs” (i.e. indymac, Washington Mutual, etc...). So after deciding that the financial companies that are included in SDY were among the healthiest in the industry, I welcomed the extra exposure, expecting that at some point the banks that weather this crisis will be handsomely rewarded, not only because they once again proved themselves (all of the Banks held by SDY made it through the S&L crisis and the fall of LTMC), but because they will gain market share simply by not going bankrupt. Moreover, if you want to make a comparison you should be aware of what the comparison is really telling you. What good is it to blindly compare the S&P 500 to any ETF if you don’t consider the underlying stocks? If, for example you had compared SDY to XLF you would have seen just why SDY is a compelling investment right now. At the time of this writing, the SDY boasts a dividend yield of 4.87% while XLF (a strictly financial ETF) is 4.55% (the S&P is only 1.67%). Thus, one might conclude that with SDY you get diversification with a huge dividend, exposure to the financials once they do bounce back, and peace of mind knowing that the fifty companies you own in this ETF have not only been around for over 25 years, not only paid a dividend for over 25 years, but have INCREASED that dividend during that time period. Again, I think it is relevant to remember the other crises we have been through during the past 25 years.

I don't think it is fair to talk about ETF's as if they all have the same purpose, function, and risk/reward. If that were the case then we wouldn't need different ETF's; SPY or DIA would serve everyone's needs. I have a long time horizon and I welcome the extra dividend that SDY provides over SPY as we work our way through the current mess. In fact, this is a very very important reason (there’s the “human” part again) to consider SDY since most bear markets turnover slowly and through a basing process. When we reach that point—and I think we are there or at least very close—I expect the compounded dividends to pay me better than both treasuries and the greater equity market as I wait for the economy to find support. The S&P contains a boatload of discretionary retailers and companies that earn their money from consumer services and products, leisure activities and is it that hard to see that the energy companies which have become quite bloated recently might also drag on the S&P. The future losses of these sectors over the next year or two (or three) won’t affect SDY nearly as much as the greater market at which point SDY, I believe, will seem like a golden egg. Any thoughts?

-Mike
]]> http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-218624 218624 Wed, 30 Jul 2008 14:36:13 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-215058 215058 Sat, 26 Jul 2008 10:51:39 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-213858 213858 Thu, 24 Jul 2008 19:48:20 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-213272 213272 Thu, 24 Jul 2008 10:37:44 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-211862 211862 Tue, 22 Jul 2008 18:01:45 -0400 Interesting piece on the OIL VIX vs. nat gas today. Very timely piece if you get a chance to read it

www.greenfaucet.com/en...]]> http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-211253 211253 Tue, 22 Jul 2008 02:37:51 -0400 www.eia.doe.gov/emeu/i...), all of North America had proved reserves of 274 trillion cubic feet at the end of 2007. Natural gas in Canada is used in the production of getting oil out of the tar sands. By comparison, Qatar had 910 trillion cubic feet, Iran had 974 trillion cubic feet and Russia had 1,688 trillion feet of proved reserves. All of Europe had 234 trillion and Japan had 1 trillion.]]> http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-211184 211184 Mon, 21 Jul 2008 22:42:26 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-211178 211178 Mon, 21 Jul 2008 22:23:19 -0400 http://seekingalpha.com/article/83408-rural-banks-to-benefit-from-agricultural-boom?source=feed#comment-210922 210922 Mon, 21 Jul 2008 16:09:21 -0400 Maybe I should be insulted by your choosing not to respond to my comments..of course I should expect silence with it being contrary to your opinion.
True]]> http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210898 210898 Mon, 21 Jul 2008 15:40:33 -0400
NG can only become a substitute for oil if we decide to burn it in our vehicle fleet. And, despite Mr. Pickens best efforts, we show no signs of moving in that direction so far. Indeed, it makes such inestimable sense, barring some long term worldwide oil catastrophe, it's unlikely we ever will.
]]> http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210869 210869 Mon, 21 Jul 2008 15:04:23 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210806 210806 Mon, 21 Jul 2008 13:59:29 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210759 210759 Mon, 21 Jul 2008 13:12:31 -0400
Petrohawk has a horizontal well producing 16.8 million cubic feet per day. From Chesapeake's recent conference call on July 2nd, their 8 horizontal wells in the Haynesville are producing 5 - 15 mmcfe per day. Louisiana pipeline infrastructure is better than the other shale plays and our NG gets to market fast. It will be interesting to see what production in the Haynesville does to inventory levels.]]> http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210659 210659 Mon, 21 Jul 2008 11:46:32 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210651 210651 Mon, 21 Jul 2008 11:39:28 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210612 210612 Mon, 21 Jul 2008 11:04:38 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210540 210540 Mon, 21 Jul 2008 09:58:35 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210533 210533 Mon, 21 Jul 2008 09:56:18 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210396 210396 Mon, 21 Jul 2008 08:10:28 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210371 210371 Mon, 21 Jul 2008 07:31:18 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210369 210369 Mon, 21 Jul 2008 07:28:38 -0400 http://seekingalpha.com/article/85939-is-natural-gas-down-for-the-count?source=feed#comment-210368 210368 Mon, 21 Jul 2008 07:26:34 -0400 http://seekingalpha.com/article/84366-manitowoc-reach-for-the-sky?source=feed#comment-205654 205654 I used to love MTW before the company did something totally demented. > They paid 2.7 billion dollars for Enodis, in expensive British pounds. > They are a 5 billion dollar company. Gutsy thing to do but any trader > knows disaster is ahead making the thing work.]]> Mon, 14 Jul 2008 23:45:00 -0400 Janie


On Jul 10 12:10 PM stephen rosenman wrote:

> I used to love MTW before the company did something totally demented.
> They paid 2.7 billion dollars for Enodis, in expensive British pounds.
> They are a 5 billion dollar company. Gutsy thing to do but any trader
> knows disaster is ahead making the thing work.]]> http://seekingalpha.com/article/83408-rural-banks-to-benefit-from-agricultural-boom?source=feed#comment-205595 205595 Mon, 14 Jul 2008 21:12:38 -0400 Sorry I should have stated the stock symbol SFNC

Trueview]]> http://seekingalpha.com/article/83408-rural-banks-to-benefit-from-agricultural-boom?source=feed#comment-204656 204656 Sun, 13 Jul 2008 18:36:29 -0400
Have you looked into or given any thought to my comments? Or is this pretty much par for the course in the banking world today.

Trueview]]> http://seekingalpha.com/article/84450-has-ben-bernanke-learned-his-lesson?source=feed#comment-202595 202595 Thu, 10 Jul 2008 18:44:15 -0400 Yeah, market in Zimbabwe really like high inflation]]> http://seekingalpha.com/article/84450-has-ben-bernanke-learned-his-lesson?source=feed#comment-202518 202518 Thu, 10 Jul 2008 16:26:56 -0400 http://seekingalpha.com/article/84450-has-ben-bernanke-learned-his-lesson?source=feed#comment-202453 202453 Thu, 10 Jul 2008 14:58:31 -0400
It is dummies like you that don't know what a PLAN is and don't pay attention. He is being leaned on by the President himself on this effort. And that is responsible, to dry up the liquidity, end the party, accept our pain and rebuild. We have no further options except to let the 1% wealthiest in government and banking continue to propogate failed theories while fleecing the entire American citizenship of a future. Sorry I was harsh but I am tired of mincing words to educate. Time is money.]]> http://seekingalpha.com/article/84366-manitowoc-reach-for-the-sky?source=feed#comment-202291 202291 Thu, 10 Jul 2008 12:10:21 -0400